Why Was the Energy East Pipeline Cancelled?

What Was the Energy East Pipeline?

Energy East, a trans-provincial pipeline project by proponent TransCanada Corp., was a 4,500-kilometre transmission line proposed to carry 1.1 million barrels per day (bpd) of crude oil from Alberta and Saskatchewan to refineries and an export terminal in Eastern Canada. It included ^[1]:

• Converting an existing natural gas pipeline to transport oil
• Construction of new pipeline segments in Alberta, Saskatchewan, Manitoba, Ontario, Quebec, and New Brunswick to connect to the converted pipeline
• Pipeline pump stations, tank terminals, and other associated facilities, including marine facilities to allow tanker access

The Eastern Mainline pipeline was also part of the project, a 279-kilometre new natural gas pipeline and related components beginning near Markham and finishing near Bourseville, Ontario ^[1].

This new gas pipeline would have helped meet growing natural gas demand in Ontario and Quebec and allowed Canada to import new gas supplies from northeastern U.S. states ^[5].

Top 3 Reasons Why the Energy East Pipeline Failed

Canada cannot afford to ignore the lessons of Energy East’s demise https://t.co/HQYQqXOS9N

— Canada Action (@CanadaAction) January 28, 2025

Anti-Canadian energy activists like to paint the cancellation of Energy East as a decision made by its proponent due to oil prices or global demand, but that's just not true.

Below are the top three reasons why Energy East failed.

#1 – Protracted Regulatory Uncertainty

Despite having widespread support from a diverse group of Canadians, business organizations and companies, the Energy East project faced a litany of regulatory hurdles which included (but are not limited to) ^[2]:

1. Extensive and protracted information requests beyond initial filings
2. Recusal of the original National Energy Board (NEB) and its replacement by a new panel of limited pertinent regulatory experience
3. Failure to use the existing regulatory record prior to the NEB’s recusal
4. Inadequate security arrangements for attempted public hearings
5. The government’s decision to change the scope of issues to be addressed by the project proponent in subsequent hearings

#2 – Huge Initial Costs with No Guarantees

Since the project was first conceived in late 2011, its proponent spent more than $1 billion on initial steps – the vast majority of which was related to regulatory processes and approval ^[2].

It is hard to imagine a scenario where any private company would spend such a vast amount of capital seeking regulatory approval if it had first known the extensive risks involved ^[2].

#3 – Lack of Government Support

The NEB’s decision to re-scope the Energy East project, a move supported by the federal government, was the last straw for the proponent before terminating the pipeline ^[2].

Dennis McConaghy, a former TransCanada executive who worked on the project, suggested that, contrary to the public announcements, the federal government’s actions throughout the regulatory process showed that it was not supportive of growing the hydrocarbon industry ^[2].

"I think it's going to be daunting for any [corporate] board in Canada, given the experience of the last 10 to 15 years, to really take the risk — what I would call the political and regulatory risk," said McConaghy in a CBC interview when asked about reviving the project ^[3].

Oil Demand Growth Since 2017

Since Energy East was terminated, global oil demand has grown from 97.67 million bpd (mbpd) in 2017 to 104.46 mbpd in 2024 ^[4]. Several projections expect global oil demand to grow even further over the decades to come.

Obstructing Canadian pipeline development, like Energy East, has done nothing to stop the growth of oil consumption globally. Instead, it has made Canada’s export-based economy weaker over the long haul while ceding massive economic opportunities to other jurisdictions abroad.

If built, Energy East would have helped insulate the Canadian economy from U.S. tariffs, making our economy stronger and also less reliant on our largest trading partner.

Canada Needs a New East Pipeline

The lessons of Energy East’s cancellation cannot be ignored any longer if Canada is expected to have a regulatory regime conducive to the construction of major energy infrastructure projects.

With a struggling economy and productivity crisis, it’s time for Canadians to build new pipelines and maximize the value of our natural resources. Canada’s economic future depends on it.

"If we needed more urgency to strengthen our country, we got it."

Nova Scotia's Premier Tim Houston is calling on Ottawa to approve the Energy East pipeline project. pic.twitter.com/AAvNQyXWtK

— Canada Action (@CanadaAction) January 23, 2025

SOURCES:

_{1 - https://www.cer-rec.gc.ca/en/applications-hearings/view-applications-projects/archive/energy-east/}

_{2 - https://financialpost.com/opinion/i-helped-plan-energy-east-and-i-know-the-governments-excuses-are-bunk}

_{3 - https://www.cbc.ca/news/canada/new-brunswick/energy-east-pipeline-revivaly-unlikely-nb-1.7439701}

_{4 - https://www.statista.com/statistics/271823/global-crude-oil-demand/}

_{5 - https://www.tcenergy.com/announcements/2014/2014-05-08transcanada-files-eastern-mainline-project-description-with-national-energy-board/}